But avoiding the sort of profligate spending of the US and UK has not saved Japan, Germany and China from credit bust fallout. Finding buyers for their exports is proving hard in a global economic downturn. To strengthen their economies, policymakers have to encourage their people to go shopping.
Shifting away from exports would not only address imbalances within these countries. Global imbalances, where countries with current account surpluses such as Japan, Germany and China helped finance the credit boom of deficit countries, could also at last be addressed.
In all three countries, governments hold the key. Fiscal policy has to be expanded but, owing to the vast differences between these economies, packages will differ.
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